Happy Forgings Limited (HFL) witnessed an impressive surge in subscription as its Initial Public Offering (IPO) kickstarted today, with the bidding process slated to persist until December 21, 2023, Thursday.
Specializing in the production of heavy forgings, HFL has strategically set the price band for the IPO within the range of Rs 808 to Rs 850 per equity share, with a formidable goal of raising a substantial Rs 1,008.59 crore.
In the grey market, Happy Forgings shares currently command a premium of Rs 430 per share, a noteworthy figure that implies an anticipated listing gain surpassing 50 per cent.
Subscription Dynamics
On the inaugural day, the IPO has already achieved full subscription. As of 4:20 pm, the IPO has been subscribed 2.02 times overall, with the retail portion experiencing an oversubscription of 2.83 times and the Non-Institutional Investor (NII) portion showing a subscription of 2.79 times.
Key IPO Parameters:
- Grey Market Premium (GMP): Notably, the grey market premium stands at Rs 430 per share (Approx).
- Price Band: Investors are engaged within the range of Rs 808 to Rs 850 per equity share.
- IPO Timeline: The IPO commenced today and is scheduled to conclude on December 21, 2023.
- IPO Size: The IPO aims to amass Rs 1,008.59 crore, with Rs 400 crore through fresh shares and Rs 608.59 crore through Offer for Sale (OFS).
- Lot Size: Each lot comprises 17 company shares.
- Allotment Date: Expectations are set for December 22, 2023, adhering to the T+3 listing rule.
- Registrar: The responsible party for managing the IPO is Link Intime India Private Limited.
- Listing Platforms: The company is poised to be listed on both BSE and NSE.
Brokerage Insights:
Several reputed brokerages, including Anand Rathi, Choice Broking, StoxBox, and Swastika Investmart, have bestowed a favorable ‘subscribe’ rating upon the IPO (India Today credits). Anand Rathi, in its comprehensive IPO note, underscored HFL’s diversified product portfolio and its successful transition from a forging-centric business to a pivotal player in the machined components manufacturing sector. Their recommendation echoes a positive sentiment, urging investors for a “Subscribe – Long Term” stance.
According to Mint, Parth Shah, Research Analyst at StoxBox, has given the ‘subscribe’ tag to the Happy Forgings IPO. Shah stated, “With the global forging and machining market expected to exhibit a Compound Annual Growth Rate (CAGR) of 5.2% by 2029, and the Indian crankshaft market for automotive, farm tractors, and industrial engines projected to grow at a CAGR of 8.3% between fiscal 2024 and 2029, the company positions itself as the comprehensive solution to meet the burgeoning market demand in both automotive and non-automotive sectors.
Assessing the financial performance, the company has shown substantial growth with Revenue/EBITDA/PAT registering a CAGR of 43%/46.6%/55.4% during the FY2021-23 period. At the upper price band, the issue is valued at a Price/Earnings (P/E) ratio of 36.4x based on FY2023 earnings, which we believe is reasonably valued. Consequently, we recommend a ‘Subscribe’ rating for the issue.”